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KUALA LUMPUR: Former 1MDB CEO Mohd Hazem Abdul Rahman told the High Court in Najib Razak’s trial that part of the US $ 3 billion raised for the Tun Razak Exchange (TRX) and Bandar Malaysia projects was spent in purchasing land in Ayer Itam, Penang for the construction of affordable housing.
He said that during the 2013 general election campaign, the former prime minister had announced that the land will be developed by 1MDB.
“The funds generated by the US $ 3 billion bonds had been spent as part of an initiative by Umno for its election campaign.
“However, we (1MDB) had never discussed this land purchase in Penang in our meetings. The funds were going to TRX, ”Hazem said.
The witness added that after taking office at 1MDB, he realized that the projects to which he was assigned were merely “vehicles” for fundraising purposes.
Hazem also testified that these projects were planned by fugitive businessman Low Taek Jho (Jho Low).
The court heard that Goldman Sachs helped 1MDB’s subsidiary company, 1MDB Global Investment Ltd, raise the $ 3 billion through bond issuance.
Hazem told the court today that 1MDB received $ 2.71 million of the bonds, with the remainder being paid to Goldman Sachs to cover its fees and other costs.
In addition to Ayer Itam’s land, he said that part of the US $ 2.71 billion raised was also used to pay off 1MDB’s debt with Standard Chartered, which amounted to RM2 billion.
“Sometime in March 2013, Jasmine (Loo Ai Swan) told me that the funds will be invested in BSI Bank Singapore,” he said, referring to the then-1MDB general counsel.
Hazem said earlier today that Low had also suggested to 1MDB Global Investment to open an account with BSI Bank in 2013, so that the money raised from the bonds could be deposited there.
He added that the account opening process was done through Loo, while Low told him and CFO Azmi Tahir to be the signatories to the account.
“I need to put on record that Azmi and I were simply signatories to the bank accounts and company documents, while Jasmine and Terence (Geh Choh Heng) were the ones running the program,” he said, referring to the chief financial officer of the company.
The witness added that Loo informed him that the money held in BSI Bank will be invested in three fund companies, namely Devonshire Capital Growth Fund, Enterprise Emerging Market Fund and Cistenique Investment Fund.
Hazem also said in September 2013, 1MDB wanted to buy an independent power producer from a power company, Jimah Energy Ventures Sdn Bhd, and that it would have cost the company around RM1 billion.
“I contacted Jho Low and told him that we needed the funds from abroad for Jimah. He told me that the money cannot be touched because it was Umno funds.
“After hearing this, I understood that Datuk Seri Najib controls Umno’s finances,” he said.
Najib was slapped with 25 counts of abuse of power and money laundering for alleged 1MDB funds in the amount of RM2.28 billion deposited into his AmBank accounts between February 2011 and December 2014.
The hearing continues before Superior Court Judge Collin Lawrence Sequerah.
